Nguyen v Director of Public Prosecutions (Ruling)
[2019] VCC 165
•25 February 2019
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| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| CONFISCATION LIST |
Case No. CI-17-05978
| IN THE MATTER of the Confiscation Act 1997 | ||
| -and- | ||
| IN THE MATTER of an application for an exclusion order under s36V of the Confiscation Act 1997 | ||
| BETWEEN: | ||
| THANH HUY NGUYEN | Applicant | |
| and | ||
| DIRECTOR OF PUBLIC PROSECUTIONS | Respondent | |
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JUDGE: | HIS HONOUR JUDGE MISSO | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11 February 2019 | |
DATE OF RULING: | 25 February 2019 | |
CASE MAY BE CITED AS: | Nguyen v Director of Public Prosecutions (Ruling) | |
| MEDIUM NEUTRAL CITATION: [First revision 27 February 2019] | [2019] VCC 165 | |
RULING
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Subject: CRIMINAL LAW – ASSETS CONFISCATION
Catchwords: Restrained property – tainted property – property used as a crop house for the cultivation of cannabis – concession that the property is tainted – application for exclusion – whether the applicant had knowledge of the use of the property – whether knowledge includes wilful blindness – onus of proof – implausibility of the applicant’s evidence
Legislation Cited: Confiscation Act 1997, s36V
Cases Cited:O’Donnell v Reichard [1975] VR 916; Gaskell v Denkas Building Services Pty Limited [2008] NSWCA 35; Le v Director of Public Prosecutions (Vic) (2007) 171 A Crim R 196
Ruling: The application for exclusion is dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Ms K Phair | Henley Legal |
| For the Respondent | Ms G A Costello | Solicitor for the Office of Public Prosecutions |
HIS HONOUR:
Introduction
1 Thanh Huy Nguyen (“the applicant”) purchased a property at Belgrave (“the property”) by a Contract of Sale of real estate executed by the applicant on 14 December 2016.
2 The applicant financed the purchase of the property with the net proceeds of sale of a property he owned, and through finance obtained from the Westpac Bank.
3 Police attached to a drug task force obtained a warrant to search the property. The warrant was executed on 3 October 2017. Investigating police discovered that the property had been set up as a crop house. An hydroponic system had been set up in several rooms, together with an electrical bypass. The cannabis crop that was found comprised 387 cannabis plants weighing 300 kilograms.
4 Ms K Phair of counsel appeared for the applicant. Ms G A Costello of counsel appeared for the respondent.
Civil forfeiture restraining order
5 The respondent filed an application pursuant to s36K of the Confiscation Act 1997 (“the Act”) dated 19 December 2017.[1] The application was supported by an affidavit of Sargent Ryan Davis (formerly Detective Senior Constable Davis) sworn 19 December 2017.[2] A Restraining Order was made on 19 December 2017.[3]
[1]Court Book ("CB") 401-402
[2]Exhibit 3, CB 76-119
[3]CB 403-404
6 The respondent filed an application for a civil forfeiture order pursuant to s37 of the Act.[4] The grounds are that there are reasonable grounds to suspect that the property is “tainted property” as defined in s3(1) of the Act.
[4]CB 405-408
7 The applicant filed an application for an exclusion order pursuant to s36V of the Act.[5] Although, the application was based on two grounds, it was only the second ground relying on s36V(1)(a)(ii) and (b)(i)(A) and (B) that was pursued. Essentially, the applicant submitted that he was not in any way involved in the commission of any relevant Schedule 2 offence. The applicant conceded that the property was “tainted property”.[6]
[5]CB 413-414
[6]The property has since been sold. The net proceeds of sale is held on trust by the Asset Confiscation Operations of the Office of Public Prosecutions
The applicant’s evidence
8 The applicant swore three affidavits, two of which were sworn on 26 April 2018,[7] and the last on 7 February 2019.[8] He was cross-examined at some length on each of the critical aspects of his evidence.
[7]Exhibit 1, Court Book (“CB”) 1-49, and 50-64
[8]Exhibit 8 - not included in the court book
9 The applicant said he purchased the property to provide accommodation for relatives who live in Vietnam who intended to travel to Australia to visit him. He intended to make all of the instalments under the mortgage during the period that his relatives resided there.[9]
[9]Exhibit 2, CB 5
10 The applicant said that he was probably capable of making all of the instalments under the mortgage for up to a year. He said he had some savings which would enable him to manage for a while. He said that if he found it difficult to make all the instalments under the mortgage, that his three siblings who live in Australia could make a contribution to help him out.[10] One sibling lives in Victoria and the other two live in Queensland.
[10]Transcript 75-76
11 The applicant described his occupation as a partner in a property development business based in Brisbane. The business involves “small property development”. His partner is a licensed builder. Together they build houses which they then sell for a profit.[11]
[11]Transcript 16, 20, 32
12 The applicant said that he decided to rent the property after he understood that his relatives had changed their plans and did not intend to visit him. The applicant advertised it for lease through his Facebook account. He said that he has since deleted the advertisement.[12] The advertisement was answered by a Thai An Nguyen (“Thai An”).
[12]Transcript 95
13 The applicant’s previous property which he sold before purchasing the property was let through a real estate agent. The applicant obtained a residential tenancy agreement from that real estate agent. He used it as the basis for leasing the property to Thai An. The lease was to commence on 15 February 2017, ceasing on 14 February 2018. Thai An was to pay a bond of $2,600. The monthly rent was fixed at $2,600 payable on the fifteenth day of every month.[13]
[13]Exhibit 2, CB 5-6, and Exhibit 7
14 The applicant said that the persons who were present when the lease was executed were himself, Thai An and Vin Le, who the applicant understood to be Thai An’s cousin.
15 The applicant obtained a photocopy of Thai An’s driver licence, and Vin Le’s driver licence and Medicare card[14] at the time the lease was executed. The applicant understood that Thai An, Vin Le, and Vin Le’s parents intended to reside at the property.[15]
[14]Referred to in the transcript as "Van Li"
[15]Transcript 51
16 The applicant said that after the lease was executed, the payment of the bond and the payment of the monthly rent were made in cash. The applicant met Thai An at a shopping centre in Springvale on the first day of a rental month to collect the rent. On two or three occasions, Vin Le met the applicant at the same place in place of Thai An.
17 The applicant said that he applied the rent to making the instalments under the mortgage, and what was left over he applied to his living expenses.
18 The applicant said that he did not visit the premises at any time during the currency of the lease, until Thai An failed to pay the rent due in October 2017. He subsequently attempted to telephone Thai An without success. His telephone had been disconnected. He then went to the property. There was no-one there. He went there again, and finding no-one there, he broke in. He had not retained a key to the property. He found the property to be in a mess. He found cut wires and pots everywhere. He also found a document bearing the word “warrant” on it. It was then that he assumed that Thai An had been arrested, perhaps for drug offences.[16]
[16]Exhibit 2, CB 6, and Transcript 119-120
19 The applicant did not re-let the property. He sold it within a year of purchasing it. He said that he intended to sell it after one year. There is no evidence of when he sold it, or for how much he sold it.[17]
[17]Transcript 56-57
The Applicant’s onus
20 It must be remembered that in an application under s36V of the Act, the onus of proof is borne by the applicant to satisfy the Court on the balance of probabilities.
No direct evidence
21 There is no evidence to suggest that the applicant set up the crop house, organised the cultivation of the cannabis grown there, or supervised the operation of the crop house.
22 Sargent Davis said that there was no evidence that the applicant was involved in any conduct associated with the crop house which warranted arresting him, subjecting him to interview with a view to charging him.[18]
[18]Transcript 135
Discharge of the onus
23 The applicant submitted that if I accepted his evidence, then he has discharged the onus to satisfy each of the relevant matters referred to in s36V(b)(i) and (ii)(A) and (B) of the Act, which are as follows:
“(b)excluding the applicant’s interest in the property from the operation of the civil forfeiture restraining order if the court is not satisfied that the property in which the applicant claims an interest is not tainted property or derived property but is satisfied that—
(i) the applicant was not, in any way, involved in the commission of any relevant Schedule 2 offence; and
(ii)where the applicant acquired the interest before the commission, or alleged commission, of the relevant Schedule 2 offences, the applicant did not know that the property—
(A)would be, or was intended to be, used in, or in connection with, the commission of any of those offences; or
(B)was likely to be, or intended to be, used in, or in connection with, the future commission of any of those offences; and … .”
24 After considering all of the evidence, I am not satisfied that the applicant has discharged the onus he bears for the following reasons.
Purchase of the property
25 The applicant’s reason for purchasing the property was to provide accommodation for his relatives from Vietnam who intended to travel to Australia to visit him. However, they changed their mind. It was as a result of that change of mind that the applicant decided to rent the property.
26 The applicant’s reason for the purchase of the property appears to me to be critically important to the discharge of his onus. If he did not purchase it to accommodate his relatives, then it begs the question why did he purchase it? The respondent submitted that the answer is clear. It can be inferred that the purpose was to set up the crop house.
27 The respondent submitted that I should draw an adverse inference against the applicant because of his failure to adduce any evidence from his relatives to corroborate his evidence of his reason for purchasing the property.
28 The use which the respondent submitted that I should make of the failure to adduce that evidence was best articulated in O’Donnell v Reichard[19] in which Newton and Norris JJ observed:
“The relevant law has been considered in recent years by appellate courts on a number of occasions: see, for example, Jones v Dunkel (1959) 101 CLR 298; [1959] ALR 367; Cafe v Australian Portland Cement Pty. Ltd. (1965) 83 WN (Pt1) (NSW) 280; Nuhic v Rail and Road Excavations, [1972] 1 NSWLR 204; and Earle v Castlemaine District Community Hospital, [1974] VR 722. See also the discussion by Street, J, (as he then was) in Dilosa v Latec Finance Pty. Ltd. (1966) 84 WN (Pt 1) (NSW) 557, at pp. 581-582. It is sufficient to say that in our opinion for the purposes of the present case the law may be stated to be that where a party without explanation fails to call as a witness a person whom he might reasonably be expected to call, if that person's evidence would be favourable to him, then, although the jury may not treat as evidence what they may as a matter of speculation think that that person would have said if he had been called as a witness, nevertheless it is open to the jury to infer that that person's evidence would not have helped that party’s case; if the jury draw that inference, then they may properly take it into account against the party in question for two purposes, namely: (a) in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; and (b) in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given, again in relation to matters with respect to which the person not called as a witness could have spoken.”[20]
[19][1975] VR 916
[20]at 929
29 The applicant submitted that I should not draw an adverse inference. He submitted that it is only available if the evidence provides a basis upon which an adverse inference can be drawn, and that such an adverse inference should not be drawn solely on the basis that a witness was not called.[21] There cannot be any doubt about the soundness of that reasoning. I do not accept, however, that the failure to adduce any evidence from his relatives can be categorised as merely a failure to adduce evidence falling short of a failure calling for an adverse inference to be drawn.
[21]Gaskell v Denkas Building Services Pty Limited [2008] NSWCA 35 at 48-49
30 I think an adverse inference can be drawn from the failure of the applicant to adduce any evidence from his relatives. The only explanation he gave for not calling his relatives is their distance from Melbourne and the cost in securing their attendance. I do not accept that he could not have obtained affidavit evidence from his relatives in Vietnam and in Australia, and organised for them to travel to Melbourne if that became necessary. The relative proximity of his relatives to Melbourne and the cost of aeroplane flights is not financially onerous. It must be remembered that his relatives in Vietnam intended to travel here to visit him, so they, or someone on their behalf, must have had the financial wherewithal to meet the relevant travel costs.
31 I think that all of the preconditions to drawing an adverse inference are established. The adverse inference is that whatever arrangements he may have had with any relatives in Vietnam, those arrangements were not the reason why he purchased the property.
The Applicant’s financial position
32 Furthermore, the respondent submitted that an adverse inference should also be drawn because of the applicant’s failure to adduce evidence of his capacity to meet the instalments under the mortgage, and no doubt other expenses associated with maintaining a home, such as rates and insurance.
33 The applicant did not produce any taxation returns or relevant bank statements to support his evidence that he had other monies available to him and was generating income from his property development business. I do not have much doubt that these records are in the possession of the applicant.
34 The applicant’s evidence about whether he could afford to make the instalments under the mortgage for up to a year while his relatives in Vietnam resided in the property was very vague. He referred to having other monies available to him, and also his income from his property development business, but at the same time he almost mused that if he struggled to make the instalments of the mortgage that he might call upon his siblings in Australia.
35 The applicant’s evidence in this respect appears to be implausible. He purchased a property which required him to pay $39,770 in stamp duty, with a significant mortgage of $550,000 without necessarily having the financial wherewithal to make the instalments under the mortgage, and meet whatever other expenses were associated with maintaining the property.
36 I think that all of the preconditions to drawing an adverse inference are established. The adverse inference is the applicant was unlikely to have had the capacity to meet the financial burden associated with maintaining the property.
Lease over the property
37 Even though I do not accept the applicant’s evidence regarding the reason for the purchase of the property, the next issue is whether he legitimately leased the property to Thai An. The respondent submitted that a critical analysis of the applicant’s evidence demonstrates that the lease is a sham.
38 The applicant was not able to produce the advertisement which he placed on his Facebook account. He gave two reasons for that: firstly, he deleted the advertisement because he did not want other persons applying to lease the property after he had secured a tenant, and, secondly, he has lost the password to his Facebook account, with the result that he is now denied access to it.
39 The following evidence makes it doubtful that the applicant advertised the property at all, and that the lease is either a sham or that the applicant was the victim of fraudulent conduct on the part of persons unknown.
40 The lessee, Thai An, was deported from Australia on 15 November 2013, and was not in Australia when the lease was allegedly executed by him.[22] That fact was not challenged by the applicant. Obviously that means that he did not negotiate the lease with Thai An.[23]
[22]Exhibit 5 and Exhibit 6
[23]Exhibit 2, CB 47-48
41 Vin Le was allegedly present at the time when the lease was executed by the applicant and Thai An. The applicant said that he obtained a copy of his driver licence and Medicare card at the time when the lease was executed.[24] The driver licence allegedly produced by Vin Le is fake. The certificate produced under s84(1) of the Road Safety Act 1986 shows that as at 5 October 2017, Vin Le was not licensed nor was he previously licensed.[25] There is no evidence to suggest that the Medicare card is fake.
[24]Exhibit 2, CB 49
[25]Exhibit 10
42 These facts alone suggest that the lease is a sham.[26] The alternative is that the person who executed the lease as lessee falsely represented himself as Thai An, and perhaps the same applies to the person who represented himself as Vin Le. The applicant’s position is that the transaction occurred with a lessee, and another person who was present, who he accepted were the persons they represented themselves to be.
[26]The respondent submitted that the applicant conceded that the lease was a sham. My recollection of his evidence aided by the transcript at 75 does not accord with the respondent's submission. I do not accept that he made such an admission.
43 Against all of this, the applicant submitted that there is some evidence that the applicant received rent in the financial year ending 30 June 2017. That evidence is contained in what appears to be internal working documents of the Australian Taxation Office.[27] There is an entry showing gross rent of $11,077 for that financial year. The lease commenced on 15 February 2017, which means that the applicant collected rent for four and a half months at $2,600 per month to the end of the financial year. The sum of $11,077 broadly equates with four and a half months’ rent.
[27]Exhibit 7, CB 311-313, and in particular, CB 348
44 Strangely, the applicant did not adduce evidence from his own taxation returns and other documents demonstrating his business interests and receipt of rent. Those documents may have been more persuasive of the issue of whether he did lease the property and did receive rent than a secondary document comprising an internal working document of the Australian Taxation Office.
45 The respondent submitted that the applicant needed to create a façade of legitimacy by having not only a lease, but also other evidence to confirm a leasing arrangement. It submitted that the applicant’s statement to the Australian Taxation Office of receipt of rent was part of the façade.
Other evidence raising doubt
46 The respondent submitted that there are other factors which, when combined with the doubt about the execution of the lease, should lead me to the conclusion that the lease is a concoction. Essentially, they were:
· The applicant made no enquiries about the suitability of the person representing himself as Thai An to be his tenant.
· He appeared unconcerned that Vin Le also intended to live at the property with his parents.
· He did not lodge the bond monies with the relevant bond authority as required by law.
· He arranged to be paid the bond and the rent in cash.
· He did not deposit those monies into a banking account, but kept the cash which he applied to making the instalments under the mortgage and applied the balance to his personal living expenses.
· There are no financial records corroborating his receipt of the bond and rent.
· He arranged to collect the cash at a shopping centre in Springvale rather than by accepted electronic means.
· He made no inspections of the property as he was entitled to do under the lease.
· He did not retain a key to the property.
· He sold the property reasonably quickly after purchasing, for an undisclosed sum. To recover the cost of purchasing it, he needed to at least obtain a capital gain to cover the stamp duty he paid of $39,770, and other costs associated with the purchase referred to in the letter of Westpac dated 17 February 2017 and Victoria Conveyancing Pty Ltd dated 10 February 2017.[28]
[28]Exhibit 2, CB 25-28
47 I have not excluded from my consideration of all of the evidence, the fact that the applicant may well be a relatively unsophisticated businessman who preferred to avoid formality when leasing the property, and liked the idea of receiving the bond and rent in cash; however, when the whole of the evidence relevant to the leasing of the property is considered, these additional factors strengthen the respondent’s submission that the lease is a concoction.
Conclusions
48 After analysing the applicant’s evidence from the reason he gave for purchasing the property to the time when he decided to sell it, I am not satisfied, on the balance of probabilities, that he had the requisite degree of knowledge that a crop house had been set up at the property.
49 I think there is merit in the attack made upon the applicant’s case by the respondent. It is readily apparent from my analysis of the applicant’s evidence that I think his evidence is implausible.
50 Although, there is no direct evidence that the applicant was knowingly involved in turning the property into a crop house, the Court of Appeal in Le v Director of Public Prosecutions (Vic)[29] observed that knowledge of an activity may be inferred:
“That said, however, it is necessary to bear two things steadily in mind. First, for the purposes of the law relating to involvement in a criminal offence, knowledge includes wilful blindness and ‘wilful blindness’ includes the actions of a person who deliberately refrains from making inquiries (sic) because he or she prefers not to have the result, or who otherwise wilfully shuts his or her eyes for fear that they may learn the truth. The point is made in Giorgianni v the Queen and reiterated in Bahri Kural v The Queen and was restated in Pereira v Director of Public Prosecutions:
‘... a combination of suspicious circumstances and failure to make inquiry may sustain an inference of knowledge of the actual or likely existence of the relevant matter. In a case where a jury is invited to draw such an inference, a failure to make inquiry may sometimes, as a matter of lawyer’s shorthand be referred to as wilful blindness … .’”
[29](2007) 171 A Crim R 196 at paragraph [23]
51 I think the evidence points to the applicant purchasing the property for the purpose of allowing it to be set up as a crop house. He needed to give a reason for purchasing it. He needed to create distance between the persons actually setting up a crop house and cultivating the cannabis which he did by being creative, entering into a lease. It occurs to me that all of this is consistent with an inference being drawn that the applicant, to borrow the words of the Court of Appeal, was wilfully blind to the cultivation of cannabis at the property.
Orders
52 For the reasons set out above, I order that the applicant’s exclusion application be dismissed, and I order that the monies produced upon the sale of the property be forfeited.
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